Vedder Price is pleased to announce that Los Angeles Shareholder Anthony Pacheco has been named by The Los Angeles Business Journal to its 2021 Leader of Influence: Litigators and Trial Lawyers list. The list highlights California litigators that go above and beyond to fight for their clients, and have stood out as the very best litigators in the business. “I am thrilled to be acknowledged as a member of such an accomplished group of trial attorneys, and congratulate all of those recognized,” stated Mr. Pacheco.  

Mr. Pacheco is a member of the Vedder Price’s Chambers USA-ranked Government Investigations and White Collar Defense group, and focuses his practice on white-collar criminal defense, internal investigations and complex business litigation, including civil and criminal trials. His clients include public and private companies, medical centers, hospitals, skilled nursing facilities, laboratories, software companies, brokerages, financial institutions, municipalities, universities, studios, post-production companies, high-level executives, doctors, lawyers, accountants and nonprofit entities. Over the course of his 30-year career, Mr. Pacheco has handled over 100 internal investigations and managed numerous sensitive public relations issues involving criminal, civil, regulatory and parallel proceedings.

In addition to his legal practice, Mr. Pacheco s an active member of the Los Angeles community, and has devoted significant time in his career to charitable causes, pro bono representations, and positions of public trust. He is a former President of the Los Angeles Board of Police Commissioners, and former Assistant United States Attorney. As the highest ranking official with the Los Angeles Police Department, Mr. Pacheco was responsible for overseeing all aspects of the Department, including its $1.3 billion budget, the Department’s policies and procedures, and the investigations of officer-involved shootings and in-custody deaths. In 2020, Public Counsel recognized Anthony for his pro bono work on behalf of the Center for Veterans’ Advancement, where he coordinates upgrade discharge requests to help veterans get the services and recognition that they deserve. Anthony is also lead pro bono counsel for the TransLatina Coalition, and is a member of the Chancery Club, the Alumni Society, the Mexican American Bar Association, and the Princeton Club of Southern California.

To read more about the Leaders of Influence: Litigators and Trial Lawyers and see Mr. Pacheco’s profile in full, please click here.

As part of its continued enforcement focus on broker-dealer registration, the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) recently settled an action with electronic order entry and management system Neovest, Inc. (“Neovest”) for engaging in “broker” activity and receiving “broker” compensation without being registered as a broker-dealer pursuant to Section 15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).¹ Both the settlement and the strong dissent from SEC Commissioner Hester Peirce leave market participants without meaningful guidance on what constitutes “broker” activity requiring registration.  Technology providers that perform functions that could easily be characterized as facilitating communications rather than securities transactions remain most vulnerable to subjective regulatory interpretation. 

The key issue was whether Neovest was “engaged in the business of effecting transactions in securities for the account of others.”  This is the definition of a “broker” under Section (3)(a)(4)(A) of the Exchange Act, which triggers broker-dealer registration under Section 15(b).  Although the topic has been evaluated in SEC no-action letters, federal court opinions, and a recent SEC release proposing a “finders” exception to broker-dealer registration, what constitutes “effecting” a securities transaction in many circumstances remains unclear.  Certain functions, such as sourcing investors or structuring or negotiating a transaction are clear “broker” functions.  But what about less obvious functions that result in a transaction?  Those functions cause the transaction to occur, but do they constitute “effecting” a transaction?  Unfortunately, following the Neovest settlement, market participants are forced to adopt the most conservative approach and must reasonably consider any action facilitating a securities transaction to be broker activity, particularly if success-based or transaction-based compensation is charged.  Indeed, as Commissioner Peirce highlights in her dissent, the existence of transaction-based compensation has all but swallowed the broker analysis, with the SEC staff potentially “drawing an arbitrary line between firms based simply on their compensation model.”²

Broker-Dealer Registration

Section 15(a) under the Exchange Act makes it unlawful to act as a “broker” without being registered as a broker-dealer pursuant to Section 15(b).  As indicated, the Exchange Act defines a “broker” as one “engaged in the business of effecting transactions in securities for the account of others.”³ There are no statutory definitions for being “engaged in the business” or “effecting transactions,” but the SEC staff has interpreted these terms broadly, considering “whether the person  participates on a regular basis in securities transactions at key points in the chain of distribution.”⁴ The SEC and courts have focused on actions indicative of “broker” conduct, including actively soliciting investors, participating in negotiations between buyer and seller, and receiving transaction-based compensation.⁵ While no particular factor is dispositive, regulators often focus on the last factor—receiving transaction-based compensation—because it confers a "salesman’s stake" in the transaction.  In the words of one SEC Commissioner, “[r]egistration helps to ensure that persons who have a ‘salesman’s stake’ in a securities transaction operate in a manner that is consistent with customer protection standards governing broker-dealers and their associated persons.”⁶ The Commissioners voting for the Neovest settlement have set transaction-based compensation as a dispositive litmus test for broker-dealer registration, but with very little legal analysis supporting this conclusion. Commissioner Peirce rightly questions, with compelling analysis, whether transaction-based compensation should have the outsized effect the Neovest order places on it. 

Legal Analysis

The facts of the Neovest case are highly relevant and, at times, cut both ways.  Neovest operates an order management and execution system through which its customers designate where an order should be routed.  Neovest itself does not make any routing decisions, but rather connects to many broker-dealers and communicates with them in connection with the routing and execution of its customers’ orders by those broker-dealers.  The broker-dealer analysis therefore turns on whether these communications constitute “effecting” a transaction.  Are they more like a communications system (similar to old-fashioned telephone lines or an Internet service provider) or does the basic act of communicating constitute “effecting” a transaction, the way a retail broker or a “high touch” sales trader might communicate to have an order executed?  While the dissent focuses on the fact that Neovest’s customers (and not Neovest) determine where an order should be routed, similar activity in other contexts clearly constitutes “broker” activity.  For example, Regulation NMS under the Exchange Act contemplates a “directed order,” defined as “an order from a customer that the customer specifically instructed the broker or dealer to route to a particular venue for execution.”⁷ No one could reasonably argue that a broker need not be registered as a broker-dealer to handle directed orders.  Perhaps this suggests that the Neovest order was rightly approved, but it more likely suggests that the current standard of what constitutes “effecting” a transaction has become unworkable. 

Neovest also marketed its services, which the settlement order viewed as “soliciting” customers. This view, however, suffers from circular reasoning: Neovest can only be soliciting brokerage customers if the service it provides (and therefore solicits) constitutes brokerage.  The practitioner is left right back at the beginning.  

Supporting the old adage that “bad facts make bad law,” Neovest ultimately may have been undone by its conduct in the marketplace, rather than by any objective legal analysis of whether its actions constituted “engaged in the business of effecting transactions in securities.”  Neovest had been acquired by a global banking organization in 2005.  After the acquisition, Neovest maintained its infrastructure and technology in an unregistered affiliate, but billed for its services from the “Neovest Division” of the broker-dealer subsidiary of the banking organization.  This “split decision” exposes inconsistent analysis.  On the one hand, Neovest must have taken the view that broker-dealer registration was not required, as it conducted its post-acquisition business in an unregistered entity.⁸ On the other hand, Neovest or its new parent must have questioned this approach, as it took affirmative steps to create a new “division” of its broker-dealer and bill for Neovest’s services from the broker-dealer entity.  This suggests that either Neovest or its banking parent identified transaction-based compensation as an issue and determined that a broker-dealer was required to conduct (or at least bill for) Neovest’s services.  But Neovest again acted inconsistent with that decision.  Rather than retain the compensation in the division of the regulated entity charging it, the Neovest division subsequently transferred the compensation to the unregistered Neovest entity.⁹

Ultimately, the SEC staff and the Commissioners voting to accept the settlement appear swayed by the existence of transaction-based compensation, paid by the brokers to which Neovest routed orders at its customers’ direction.  Unfortunately, the settlement order is extremely short on legal analysis, and the reader is left only to infer what the legal rationale for the violation must have been.  The most logical inference is that the SEC views any order handling or order routing, coupled with transaction-based compensation, to be “broker” activity, even if such handling consists solely of communicating, without additional judgment or discretion, at its clients’ direction.  The consequence of such inference  is the broadest possible reading of “effecting”, that one is “effecting” a transaction by taking any action to cause the transaction to occur.  Technology providers, which provide any number of services that bring about a securities transaction, are on notice that with this broad reading, the form of compensation charged could trigger the broker registration requirement.  The consequences for not registering are significant.  Beyond an SEC enforcement action and penalty, the Exchange Act provides a right of rescission to parties to a securities contract the performance of which involves the violation of any provision of the Exchange Act, including the broker-dealer registration provisions.¹⁰ Thus, unregistered brokers operate at significant peril.

Conclusion

The Neovest order sets transaction-based compensation as the litmus test for broker-dealer registration while Commissioner Peirce’s dissent critically and appropriately questions whether registration should turn so sharply on the form of compensation.  Perhaps a better analysis would have been to focus not on the form of the compensation, but the economics of the compensation.  If the amount charged, regardless of form, is consistent with what a broker charges for effecting a transaction, that suggests that the service actually provided is execution, requiring broker-dealer registration.  But if the amount charged, again regardless of form, is consistent with what a technology or ancillary service provider or service bureau would charge, it suggests that the fee is for that ancillary or technology service and not for “broker” conduct, such as effecting a securities transaction.  Unfortunately, the Neovest order did not adopt this approach. 

In her dissent, Commissioner Peirce noted that “the public would have benefitted from the Commission’s careful consideration” of what constitutes broker activity, either through a Report pursuant to Section 21(a)(1) under the Exchange Act or through other Commission action.¹¹ Indeed, this is a missed opportunity, likely resulting in continued fact-driven no-action guidance from the SEC staff, rather than definitive legal guidance and analysis from the Commission.   

_____________________________________________

1. See In the Matter of Neovest, Inc., Release No. 34-92285 (June 29, 2021), available at https://www.sec.gov/litigation/admin/2021/34-92285.pdf.
2. Statement Regarding Neovest, Inc., Commissioner Hester M. Peirce (June 29, 2021), available at https://www.sec.gov/news/public-statement/peirce-statement-neovest-062921, at 3.
3. See Exchange Act Section 3(a)(4)(A).
4. See Release No. 34-90112 (Oct. 7, 2020), available at https://www.sec.gov/rules/exorders/2020/34-90112.pdf.
5. SEC v. Hansen, 1984 U.S. Dist. LEXIS 17835, at *26 (S.D.N.Y. Apr. 6, 1984). See also Division of Trading and Markets, U.S. Securities and Exchange Commission, SEC Guide to Broker-Dealer Registration (Apr. 2008), available at https://www.sec.gov/reportspubs/investor-publications/divisionsmarketregbdguidehtm.html.
6. See Statement of Commissioner Allison Herren Lee, Oct. 7, 2020 at n.9 (collecting no-action letters requiring registration based upon “salesman’s stake” rationale).
7. Regulation NMS, Rule 600(a)(27).
8. Prior to the acquisition, Neovest was registered as a broker-dealer. This is another distracting fact, as it speaks only to prior practice but not whether transmitting messages for orders and executions without more requires broker-dealer registration.
9. Under FINRA rules, broker-dealers are directly prohibited from sharing transaction-based compensation with non-broker-dealers. See FINRA Rule 2060. This violation was not charged in the Neovest order, and the broker-dealer subsidiary was not a party to that order, perhaps because the SEC can enforce violations of FINRA rules only through civil injunctive action and not via Commission order.
10. See Exchange Act Section 29(b).
11. Statement Regarding Neovest, Inc., supra note 2, at 4.

Vedder Price is pleased to announce that Los Angeles Shareholder Anthony Pacheco has been named by The Los Angeles Business Journal to its 2021 Leader of Influence: Litigators and Trial Lawyers list. The list highlights California litigators that go above and beyond to fight for their clients, and have stood out as the very best litigators in the business. “I am thrilled to be acknowledged as a member of such an accomplished group of trial attorneys, and congratulate all of those recognized,” stated Mr. Pacheco.  

Mr. Pacheco is a member of the Vedder Price’s Chambers USA-ranked Government Investigations and White Collar Defense group, and focuses his practice on white-collar criminal defense, internal investigations and complex business litigation, including civil and criminal trials. His clients include public and private companies, medical centers, hospitals, skilled nursing facilities, laboratories, software companies, brokerages, financial institutions, municipalities, universities, studios, post-production companies, high-level executives, doctors, lawyers, accountants and nonprofit entities. Over the course of his 30-year career, Mr. Pacheco has handled over 100 internal investigations and managed numerous sensitive public relations issues involving criminal, civil, regulatory and parallel proceedings.

In addition to his legal practice, Mr. Pacheco s an active member of the Los Angeles community, and has devoted significant time in his career to charitable causes, pro bono representations, and positions of public trust. He is a former President of the Los Angeles Board of Police Commissioners, and former Assistant United States Attorney. As the highest ranking official with the Los Angeles Police Department, Mr. Pacheco was responsible for overseeing all aspects of the Department, including its $1.3 billion budget, the Department’s policies and procedures, and the investigations of officer-involved shootings and in-custody deaths. In 2020, Public Counsel recognized Anthony for his pro bono work on behalf of the Center for Veterans’ Advancement, where he coordinates upgrade discharge requests to help veterans get the services and recognition that they deserve. Anthony is also lead pro bono counsel for the TransLatina Coalition, and is a member of the Chancery Club, the Alumni Society, the Mexican American Bar Association, and the Princeton Club of Southern California.

To read more about the Leaders of Influence: Litigators and Trial Lawyers and see Mr. Pacheco’s profile in full, please click here.

Vedder Price is pleased to announce that it represented RadiantESG, a women-owned ESG and diversity and inclusion (D&I) focused advisory firm, in connection with the acquisition of a minority interest in the company by HSBC Asset Management.

With the investment by HSBC Asset Management, RadiantESG will become RadiantESG Global Investors, a female-owned, independent asset management firm focused on next generation ESG investment opportunities for institutional and wealth management clients worldwide. RadiantESG Global Investors intends to launch the next phase of their growth later this year, with two investment strategies anchored on its proprietary ‘Positive Change’ concept of ESG, which captures ESG Leaders, ESG Evolvers and UNSDG-aligned companies. The firm’s co-founders, Heidi Ridley and Kathryn McDonald, will retain majority ownership under the terms of the investment. Additionally, they will also have independence and autonomy in executing RadiantESG’s ambition to pave the way toward a brighter future through embracing ESG, diversity and inclusion as integral to building a successful investment practice.

“Our team is very pleased to have assisted RadiantESG in this matter,” commented Joe Mannon, Chair of Vedder Price’s Private Fund Formation group. “Heidi and Kathryn have created a unique firm with a strong cultural foundation built on a sophisticated approach to ESG, an innovative mindset and a client-first focus. We look forward to the continued growth opportunities, distinctive products and strong global market presence that this investment by HSBC Asset Management will make possible for RadiantESG.”

Mr. Mannon and fellow shareholder Shelby E. Parnes led the team representing RadiantESG in the deal, supported by team members Matthew P. Larvick and Zachary K. Iacovino.

Employment Associate Daniel Stander recently commented in Retail Gazette on the “fire and re-hire” strategy within retail.

Amidst the COVID-19 pandemic, many retail businesses faced huge challenges and used the “fire and re-hire” strategy as a way to reduce redundancies in employees. The practice has recently come under public scrutiny as many popular companies, such as Tesco and Clarks, have used this strategy to change employees terms and conditions. While this is technically lawful, the practice doesn’t come without significant risks, both legally and reputationally.

According to Mr. Stander, “fire and re-hire” should be used only as a last resort. “There is likely to be a PR aspect to consider, given the proliferation of ‘naming and shaming’ in the social media age, therefore any business will want to ensure as best it can that its employee relations strategy is strong,” he said.

Click here to read Mr. Stander’s commentary and the article in full.

As part of its continued enforcement focus on broker-dealer registration, the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) recently settled an action with electronic order entry and management system Neovest, Inc. (“Neovest”) for engaging in “broker” activity and receiving “broker” compensation without being registered as a broker-dealer pursuant to Section 15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).¹ Both the settlement and the strong dissent from SEC Commissioner Hester Peirce leave market participants without meaningful guidance on what constitutes “broker” activity requiring registration.  Technology providers that perform functions that could easily be characterized as facilitating communications rather than securities transactions remain most vulnerable to subjective regulatory interpretation. 

The key issue was whether Neovest was “engaged in the business of effecting transactions in securities for the account of others.”  This is the definition of a “broker” under Section (3)(a)(4)(A) of the Exchange Act, which triggers broker-dealer registration under Section 15(b).  Although the topic has been evaluated in SEC no-action letters, federal court opinions, and a recent SEC release proposing a “finders” exception to broker-dealer registration, what constitutes “effecting” a securities transaction in many circumstances remains unclear.  Certain functions, such as sourcing investors or structuring or negotiating a transaction are clear “broker” functions.  But what about less obvious functions that result in a transaction?  Those functions cause the transaction to occur, but do they constitute “effecting” a transaction?  Unfortunately, following the Neovest settlement, market participants are forced to adopt the most conservative approach and must reasonably consider any action facilitating a securities transaction to be broker activity, particularly if success-based or transaction-based compensation is charged.  Indeed, as Commissioner Peirce highlights in her dissent, the existence of transaction-based compensation has all but swallowed the broker analysis, with the SEC staff potentially “drawing an arbitrary line between firms based simply on their compensation model.”²

Broker-Dealer Registration

Section 15(a) under the Exchange Act makes it unlawful to act as a “broker” without being registered as a broker-dealer pursuant to Section 15(b).  As indicated, the Exchange Act defines a “broker” as one “engaged in the business of effecting transactions in securities for the account of others.”³ There are no statutory definitions for being “engaged in the business” or “effecting transactions,” but the SEC staff has interpreted these terms broadly, considering “whether the person  participates on a regular basis in securities transactions at key points in the chain of distribution.”⁴ The SEC and courts have focused on actions indicative of “broker” conduct, including actively soliciting investors, participating in negotiations between buyer and seller, and receiving transaction-based compensation.⁵ While no particular factor is dispositive, regulators often focus on the last factor—receiving transaction-based compensation—because it confers a "salesman’s stake" in the transaction.  In the words of one SEC Commissioner, “[r]egistration helps to ensure that persons who have a ‘salesman’s stake’ in a securities transaction operate in a manner that is consistent with customer protection standards governing broker-dealers and their associated persons.”⁶ The Commissioners voting for the Neovest settlement have set transaction-based compensation as a dispositive litmus test for broker-dealer registration, but with very little legal analysis supporting this conclusion. Commissioner Peirce rightly questions, with compelling analysis, whether transaction-based compensation should have the outsized effect the Neovest order places on it. 

Legal Analysis

The facts of the Neovest case are highly relevant and, at times, cut both ways.  Neovest operates an order management and execution system through which its customers designate where an order should be routed.  Neovest itself does not make any routing decisions, but rather connects to many broker-dealers and communicates with them in connection with the routing and execution of its customers’ orders by those broker-dealers.  The broker-dealer analysis therefore turns on whether these communications constitute “effecting” a transaction.  Are they more like a communications system (similar to old-fashioned telephone lines or an Internet service provider) or does the basic act of communicating constitute “effecting” a transaction, the way a retail broker or a “high touch” sales trader might communicate to have an order executed?  While the dissent focuses on the fact that Neovest’s customers (and not Neovest) determine where an order should be routed, similar activity in other contexts clearly constitutes “broker” activity.  For example, Regulation NMS under the Exchange Act contemplates a “directed order,” defined as “an order from a customer that the customer specifically instructed the broker or dealer to route to a particular venue for execution.”⁷ No one could reasonably argue that a broker need not be registered as a broker-dealer to handle directed orders.  Perhaps this suggests that the Neovest order was rightly approved, but it more likely suggests that the current standard of what constitutes “effecting” a transaction has become unworkable. 

Neovest also marketed its services, which the settlement order viewed as “soliciting” customers. This view, however, suffers from circular reasoning: Neovest can only be soliciting brokerage customers if the service it provides (and therefore solicits) constitutes brokerage.  The practitioner is left right back at the beginning.  

Supporting the old adage that “bad facts make bad law,” Neovest ultimately may have been undone by its conduct in the marketplace, rather than by any objective legal analysis of whether its actions constituted “engaged in the business of effecting transactions in securities.”  Neovest had been acquired by a global banking organization in 2005.  After the acquisition, Neovest maintained its infrastructure and technology in an unregistered affiliate, but billed for its services from the “Neovest Division” of the broker-dealer subsidiary of the banking organization.  This “split decision” exposes inconsistent analysis.  On the one hand, Neovest must have taken the view that broker-dealer registration was not required, as it conducted its post-acquisition business in an unregistered entity.⁸ On the other hand, Neovest or its new parent must have questioned this approach, as it took affirmative steps to create a new “division” of its broker-dealer and bill for Neovest’s services from the broker-dealer entity.  This suggests that either Neovest or its banking parent identified transaction-based compensation as an issue and determined that a broker-dealer was required to conduct (or at least bill for) Neovest’s services.  But Neovest again acted inconsistent with that decision.  Rather than retain the compensation in the division of the regulated entity charging it, the Neovest division subsequently transferred the compensation to the unregistered Neovest entity.⁹

Ultimately, the SEC staff and the Commissioners voting to accept the settlement appear swayed by the existence of transaction-based compensation, paid by the brokers to which Neovest routed orders at its customers’ direction.  Unfortunately, the settlement order is extremely short on legal analysis, and the reader is left only to infer what the legal rationale for the violation must have been.  The most logical inference is that the SEC views any order handling or order routing, coupled with transaction-based compensation, to be “broker” activity, even if such handling consists solely of communicating, without additional judgment or discretion, at its clients’ direction.  The consequence of such inference  is the broadest possible reading of “effecting”, that one is “effecting” a transaction by taking any action to cause the transaction to occur.  Technology providers, which provide any number of services that bring about a securities transaction, are on notice that with this broad reading, the form of compensation charged could trigger the broker registration requirement.  The consequences for not registering are significant.  Beyond an SEC enforcement action and penalty, the Exchange Act provides a right of rescission to parties to a securities contract the performance of which involves the violation of any provision of the Exchange Act, including the broker-dealer registration provisions.¹⁰ Thus, unregistered brokers operate at significant peril.

Conclusion

The Neovest order sets transaction-based compensation as the litmus test for broker-dealer registration while Commissioner Peirce’s dissent critically and appropriately questions whether registration should turn so sharply on the form of compensation.  Perhaps a better analysis would have been to focus not on the form of the compensation, but the economics of the compensation.  If the amount charged, regardless of form, is consistent with what a broker charges for effecting a transaction, that suggests that the service actually provided is execution, requiring broker-dealer registration.  But if the amount charged, again regardless of form, is consistent with what a technology or ancillary service provider or service bureau would charge, it suggests that the fee is for that ancillary or technology service and not for “broker” conduct, such as effecting a securities transaction.  Unfortunately, the Neovest order did not adopt this approach. 

In her dissent, Commissioner Peirce noted that “the public would have benefitted from the Commission’s careful consideration” of what constitutes broker activity, either through a Report pursuant to Section 21(a)(1) under the Exchange Act or through other Commission action.¹¹ Indeed, this is a missed opportunity, likely resulting in continued fact-driven no-action guidance from the SEC staff, rather than definitive legal guidance and analysis from the Commission.   

_____________________________________________

1. See In the Matter of Neovest, Inc., Release No. 34-92285 (June 29, 2021), available at https://www.sec.gov/litigation/admin/2021/34-92285.pdf.
2. Statement Regarding Neovest, Inc., Commissioner Hester M. Peirce (June 29, 2021), available at https://www.sec.gov/news/public-statement/peirce-statement-neovest-062921, at 3.
3. See Exchange Act Section 3(a)(4)(A).
4. See Release No. 34-90112 (Oct. 7, 2020), available at https://www.sec.gov/rules/exorders/2020/34-90112.pdf.
5. SEC v. Hansen, 1984 U.S. Dist. LEXIS 17835, at *26 (S.D.N.Y. Apr. 6, 1984). See also Division of Trading and Markets, U.S. Securities and Exchange Commission, SEC Guide to Broker-Dealer Registration (Apr. 2008), available at https://www.sec.gov/reportspubs/investor-publications/divisionsmarketregbdguidehtm.html.
6. See Statement of Commissioner Allison Herren Lee, Oct. 7, 2020 at n.9 (collecting no-action letters requiring registration based upon “salesman’s stake” rationale).
7. Regulation NMS, Rule 600(a)(27).
8. Prior to the acquisition, Neovest was registered as a broker-dealer. This is another distracting fact, as it speaks only to prior practice but not whether transmitting messages for orders and executions without more requires broker-dealer registration.
9. Under FINRA rules, broker-dealers are directly prohibited from sharing transaction-based compensation with non-broker-dealers. See FINRA Rule 2060. This violation was not charged in the Neovest order, and the broker-dealer subsidiary was not a party to that order, perhaps because the SEC can enforce violations of FINRA rules only through civil injunctive action and not via Commission order.
10. See Exchange Act Section 29(b).
11. Statement Regarding Neovest, Inc., supra note 2, at 4.

Please join Vedder Price shareholder Elizabeth Silver for a webinar discussion of how to assess and manage your company’s U.S. Foreign Corrupt Practices Act (FCPA) risks.

The FCPA is a far-reaching federal anti-corruption law that applies to all U.S. persons, all U.S. companies conducting business overseas, and all persons within the territory of the United States, with serious potential civil and criminal penalties for violations. Enforcement actions under the FCPA had already reached record levels in recent years, and are anticipated to increase even further under the Biden Administration, which recently framed combatting corruption as a core U.S. national security interest.

Our program will provide practical guidance for executives and legal and compliance professionals regarding the following topics:

• The history and background of the FCPA
• The latest developments in FCPA case law and enforcement
• The hallmarks of an effective FCPA compliance program
• How to assess your FCPA risk

CLE Credit

Vedder Price is an accredited CLE provider in California, Illinois and New York and, when possible, a sponsor in Virginia.

On Wednesday, August 4, Douglas Lipke will be a featured speaker for a Strafford Publications webinar entitled DIP Financing: Structuring Roll-Overs, Cross-Collateralization, Priming Liens, Junior DIP Financing, and More.

Mr. Lipke is a Shareholder in Vedder Price’s Chicago office who concentrates his practice in the area of workout, bankruptcy and corporate reorganization law. He and his co-panelist will discuss the challenges of debtor-in-possession (DIP) financings, which are often the subject of contentious negotiations between DIP lenders and other secured creditors, as well as the subject of intense scrutiny by bankruptcy judges. The panel will address current case law, and provide practice tips for counsel that represent DIP lenders, other secured lenders, and debtors.

The panel will review these and other key issues:

• What must counsel consider in evaluating defensive vs. offensive DIP loans?
• How does the debtor seeking a priming lien convince the existing lender to consent or convince the court that the current lender's lien is adequately protected?
• How do bankruptcy courts treat releases of pre-petition secured lenders?

We hope you can join Mr. Lipke and his co-panelist. For more information and to register, please click here.